Correlation Between NV Nederlandsche and Aperam SA

Can any of the company-specific risk be diversified away by investing in both NV Nederlandsche and Aperam SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NV Nederlandsche and Aperam SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NV Nederlandsche Apparatenfabriek and Aperam SA, you can compare the effects of market volatilities on NV Nederlandsche and Aperam SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NV Nederlandsche with a short position of Aperam SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NV Nederlandsche and Aperam SA.

Diversification Opportunities for NV Nederlandsche and Aperam SA

-0.5

Correlation Coefficient

NV Nederlandsche  Aperam SA

Very good diversification

The 3 months correlation between NEDAP and Aperam is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding NV Nederlandsche Apparatenfabr and Aperam SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aperam SA and NV Nederlandsche is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NV Nederlandsche Apparatenfabriek are associated (or correlated) with Aperam SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aperam SA has no effect on the direction of NV Nederlandsche i.e., NV Nederlandsche and Aperam SA go up and down completely randomly.

Pair Corralation between NV Nederlandsche and Aperam SA

Assuming the 90 days trading horizon NV Nederlandsche Apparatenfabriek is expected to under-perform the Aperam SA. But the stock apears to be less risky and, when comparing its historical volatility, NV Nederlandsche Apparatenfabriek is 1.52 times less risky than Aperam SA. The stock trades about -0.05 of its potential returns per unit of risk. The Aperam SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,317  in Aperam SA on September 12, 2024 and sell it today you would earn a total of  529.00  from holding Aperam SA or generate 22.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NV Nederlandsche Apparatenfabr  vs.  Aperam SA

NV Nederlandsche App

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV Nederlandsche Apparatenfabriek has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NV Nederlandsche is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aperam SA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aperam SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aperam SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NV Nederlandsche and Aperam SA

The main advantage of trading using opposite NV Nederlandsche and Aperam SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NV Nederlandsche position performs unexpectedly, Aperam SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aperam SA will offset losses from the drop in Aperam SA's long position.

The idea behind NV Nederlandsche Apparatenfabriek and Aperam SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.